How to Build a Customer Loyalty Program

September 21, 2014

Boston-based restaurant chain b.good started its customer loyalty program with email 12 years ago because, well, it couldn’t afford much else. As the chain has grown, so has its rewards program, which now has 53,000 ‘Family’ members using keycards and smartphone apps to connect with b.good.

When b.good opened its first restaurant 12 years ago, the company had invested so much in its actual location that it had little left over for marketing.

B.good, with the tagline “real.food.fast,” now has 12 restaurants in Massachusetts, Maine and Connecticut, with locations in New Jersey and Rhode Island opening this spring. One way the restaurant spread its brand was through a customer loyalty system, which began with email newsletters and coupons but now includes an app and keycard program that serves 53,000 of b.good’s favorite customers.

When b.good started, co-founder Jon Olinto says, the idea was to have a relationship with the people who provided everything for their restaurant: “The people who grow our vegetables, raise our beef, make our cheese, make our yogurt for our smoothies.” This idea extended to the customer, which is how the b.good Family was formed.

“The old way of dealing with customers was very-push oriented. It was all about the brand,” says Mary Wardley, program vice president of CRM and enterprise applications at the analyst firm IDC. “Now we’ve swung the pendulum and it’s about the customer. Where’s the mutually agreed upon ground where customers are heard, we can reach them and we’re respectful? We need to be authentic in this interaction.”

Here’s how b.good’s customer loyalty program makes those interactions authentic.

Customer Loyalty Program Started With Email Freebies

Upon opening its first restaurant, b.good started using email to reach customers for a simple reason: Cost, or lack thereof. The company didn’t have a lot of money for advertising — certainly not enough for a traditional radio or TV ad campaign — but still needed to get the word out.

“We knew we had to use email as a channel to connect with customers. It was free. We had a story to tell,” Olinto says.

To start, b.good captured email addresses manually, either into a laptop in the store or through paper sign-ups. The restaurant used those email addresses, not just to share its story but also to give away coupons for free food as a way to build awareness about the company.

From the beginning, Olinto says, it was about giving “our family members” food for free as long as they stayed engaged enough to listen to the b.good story and participate in its concept — “anything in co-creation of the brand,” he says. Creating what he calls an “information street team” brought awareness to what the restaurant was doing, for a lower cost.

Five years into the program, b.good realized that, while the email coupon system brought people into the store, the company had no idea how efficient that system was. “The campaigns and promotions were out of control,” Olinto says. “We knew our system was flawed because we weren’t able to measure and see who the real ambassadors were.”

Harnessing data about those promotions, and who are a company’s best customers, is an important part of promoting a brand, says Wardley. “Creating a good customer experience for everyone is meaningful — but within that customer base, your best customers turn into your advocates.”

B.good hired CaptureCode to build from scratch a system to do two things: See who was buying what, and when, and help b.good employees interact with customers on a personal level.

The answer was a keycard. When customers scan their keycards, several bits of information appear: First and last name, number of visits, promotions available to use (if any) and a “fun fact,” which can be anything from a peanut allergy to the name of their dog. That information is flashed to the cashier, but it’s also printed on the customer’s order ticket so anyone handling that food can see it.

Aside from letting employees know about customers’ food allergies, it also helps owners understand their key customers. This lets them target promotions and giveaways to those customers, rather than set a wide range and hope to hit them by accident.

“We wanted to be able to send gifts to people in a way that was personal,” Olinto says. The system is so specific, Olinto adds, that he can go in and personally “gift” someone a food item after having a conversation right in a store.

‘Family’ App Lets b.good Customers See Gifts, Pay for Food Fast

Not wanting to discriminate against customers who don’t have a smartphone, b.good started its Family program with a key card. Two months ago, it launched the b.good Family app for both iOS and Android platforms.

The app does a few things. First, it performs the same functions as the keycard. Second, it makes getting and sharing gifts much easier. Not only can a customer use a coupon for a free gift right from the app, but he or she can also gift it to another person — and even change the name on the promotion while doing so.

B.good also started a program that lets customers “gift” the food to charity. Right now, those donations go to an elementary school in Boston, but Olinto hopes to expand the program so donations go to organizations more relevant to where customers are located.

Third, customers can pay for their food through their b.good Family app. The first time a customer uses the app and pays with a credit card, the cashier can add the credit card information into the app, allowing the customer to pay that way next time. (This functionality isn’t available on the keycard).

Of course, customers can still use keycards. When they sign up in store or at events outside the restaurant, those keycards are activated through iPhones or iPads.

Wardley says maintaining contact on multiple platforms makes sense. “We might think that everybody’s on a smartphone, and that’s not true,” she says. “Look at the keycard. You’ve got your keys in your car with you. But when I ride my bike, I have my phone.”

Staying active in email, keycard and smartphone apps, as b.good does, is “reinforcing cross-channel connections,” she adds. “A customer will move among those channels, considering the convenience of that particular moment.”

Customer Loyalty System Getting Results or b.good

Olinto says the system has been a resounding success. Between app and keycard users, b.good has 53,000 family members.

Beyond the numbers, Olinto says the customer loyalty program is about creating “stickiness” and making it easier for people to participate. “We don’t care if you pay with your phone,” he says. “We just want you to use the system. We want you using it every time you come in.”

Customers participate beyond simply using the app at point of sale, too. “The amount of feedback through the app is incredible,” he says, with many customers getting in touch while still in the restaurant. Olinto says b.good receives a message every 20 to 30 minutes from people checking in from different locations and sharing their experience.

Wardley says b.good’s strategy helps customers become associated with the brand — one that supports healthy food and local farmers — by extending the customer experience beyond the store.

“In a market where there’s choice, you’re probably going to make a choice on a complex mix of variables that include quality of food, whether or not you feel this brand has good morals, integrity” and respect, she says. “There’s loyalty in wanting to be associated with b.good’s principles. In a market where there’s choice, they are differentiating themselves.”

Jen A. Miller is a freelance journalist from New Jersey who writes for the New York Times, Philadelphia Inquirer and Runner’s World, among others. She can be reached at www.jenamiller.com or n Twitter at @byJenAMiller. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.